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The EU looks at fracking: regulations taking shape

Energy Alert

Hydraulic fracturing, or "fracking," to extract shale gas from deep rock formations, has recently been much in the news in Europe.

In October, the European Parliament, which was considering proposals for a revision of the EU Directive on Environmental Impact Assessment (EIA), voted to make EIA mandatory for all projects for the exploration of non-conventional hydrocarbons (i.e., shale gas and oil and coal gas) by hydraulic fracturing, but not for certain exploration works.

At about the same time, the EU Commission announced it had started work on a proposal to provide a level playing field on shale gas development by preparing draft EU legislation to govern wider aspects of this type of project. It is thought this will address water pollution issues, the use of chemicals and the impacts of infrastructure development.

Both of these moves appear to be a response to concerns raised by certain environmental groups in Europe which are opposed to fracking, partly on the basis of a highly selective view of experience in the US, and partly out of opposition to what they see as a means of continuing dependency on fossil fuels.

In France, the influence of the Green Party – on which the current government is dependent for political support – has actually led to the passing of a law prohibiting the use of hydraulic fracturing for the exploration and exploitation of shale gas and annulling existing licences. This law was challenged by the US shale gas company Schuepbach Energy, which held some of those licences, but in October the law was upheld by the Constitutional Council, the French court, composed of judges and former presidents of the Republic, which hears challenges to the constitutionality of legislation.

Part of the background to the French legislation is that while France has extensive resources of shale gas which could be exploited by fracking, it largely relies on a network of nuclear power stations to supply its energy needs. Its government can therefore forego the economic opportunities that fracking offers for the purpose of political advantage.

However, the governments of some other EU states are notably more sympathetic to the process of fracking for shale gas.

Opposition to new European Community legislation on the topic has been voiced both by the Polish Environment Minister and a minister in the UK's Department of Energy and Climate Change.

The UK government supports projects for the exploration and exploitation of shale gas using hydraulic fracturing techniques, provided that these are subject to proper regulatory controls. The UK government also believes that the current regulatory controls which apply to fracking in the UK are generally robust.

The UK government bases its views on the recommendations of a report published in June 2012 by the Royal Society and the Royal Academy of Engineering. That report reflects a broad scientific and engineering consensus in the UK that adverse environmental and health effects of onshore natural gas extraction from shales, which have given rise to controversy in some quarters in the US, are more likely to be related to issues with well construction at the surface, than the process of hydraulic fracturing at depth. That technique has been deployed extensively and for some time without apparent problems in the field of conventional hydrocarbon exploitation, through so far mainly offshore.

While the UK government is committed to reducing dependency on fossil fuels, it also sees the exploitation of shale gas reserves as a means of reducing pressure on gas prices in the short term and meeting the country's energy shortage, pending the development of new nuclear and renewables capacity.

It should be said that the matter is not entirely free from controversy in the UK. Earlier this year, protests by an environmentalist group succeeded in halting operations for exploratory drilling in Balcombe, Sussex, by a company which had previously carried out trial fracking for shale gas in Lancashire and is interested in developing the process further in the UK. The company’s operations in Sussex did not in fact involve fracking – the well was being drilled for oil. However, the protesters were able to coalesce concerns over surface impacts in a rural area dominated by extremely affluent residents. This was despite the fact that stringent environmental controls apply in the UK. Furthermore, for many decades conventional onshore oil exploitation has been carried on successfully in areas of outstanding natural beauty, for example, at Wytch Farm in Dorset, without adverse environmental impact. At Wytch Farm, operations to enhance recovery from the wells have actually included fracking, previously called "enhanced permeability."

The EU Parliament's proposal, for mandatory environmental assessment of all shale gas projects where fracking is used, willrequire the backing of a majority of the member states. However, the UK government is unlikely to oppose it – a new provision for mandatory EIA was one of the recommendations of the Royal Society/RAE review. The proposal is unlikely to create a major barrier to projects, although it may provide increased scope for delay through legal challenges. EIA is already required for projects which meet certain size thresholds.

Details of the European Commission's proposal for legalisation remain to be seen and are likely to give rise to extensive debate. Undoubtedly, there are some member states, like France, which would like to see their own policies extended across the EU, so that other cannot benefit from a ban they have imposed, or might like to impose, for political reasons.

However, the Commission is unlikely to propose an outright ban, nor the majority of member states to agree it. In reality, the proposals are likely to be based on the existing EU regulatory regimes on the environment, which already govern operations in the UK.

For more information about regulations around hydraulic fracturing in Europe, please contact Teresa Hitchcock.